Informer

Dealings with "The Gambler"

In 1995 entertainer Kenny Rogers got $2.7 million to end his three-year partnership with Branson, Mo. theme park bosses/brothers Jack R. and Peter Herschend. The partnership de-ducted this as a business expense, but the Internal Revenue Service says it was really a nondeductible "transaction between partners." This is a still unresolved part of an IRS claim the Herschends are litigating in U.S. Tax Court that several of their entities understated income by a total of $9 million from 1994 to 1996. A Herschend statement says Rogers, whose rep declined comment, hasn't consented to a negotiated settlement with the feds. The Herschends have interests in many successful attractions, notably Tennessee's Dolly Parton-themed Dollywood. But as for Rogers, a Herschend filing laments, "The partnership never produced any profits." --Janet Novack and William P. Barrett

Death and Taxes

Remember Konstantinos Boulis, the south Florida businessman whose still unsolved 2001 gangland-style murder came amid dealings with now-infamous Washington lobbyist Jack A. Abramoff? The IRS says his heirs understated his $71 million estate by 70%. His executors are in U.S. Tax Court fighting a bill for another $31 million in estate taxes. The sides differ on the valuation of dozens of items, including Greek real estate, resorts in the U.S. and stock holdings. The estate deducted $19 million to cover adverse results from pending litigation; the feds say zero. At the center of an unfolding influence-peddling scandal in Washington, Abramoff has pleaded innocent to federal fraud charges that he used phony documents to line up financing to buy Boulis' now bankrupt gambling boat operation for $147 million. Boulis was killed a few months later. --J.N. and W.P.B.

Lost Horizon

Still reeling from a mutual fund trading scandal, Boston's Putnam Investments issued a press release noting the 80th birthday this month of industry pioneer Putnam Investors Fund. The statement said that over three years the large-cap fund (assets: $3.8 billion) beat 89% of peers as well as the S&P 500 and that $10,000 invested at the fund's December 1925 inception would be worth $15.5 million now. Unmentioned: That same sum invested in January 1926 in what's now the S&P 500 (if you could have done that with no overhead cost) would be worth $27 million. Putnam did append a footnote calling 80 years "longer than the investment time horizon of many investors." --W.P.B.

So That's the Thanks We Get!

Did Martek Biosciences, which produces fatty oils used in baby formula, commit fraud as FORBES ranked it number six on our fastest-growing tech company list in February? A half-dozen shareholder lawsuits allege as much, claiming the Columbia, Md. firm, in advance of a stock offering, inflated sales by shipping more product than warranted. In April Martek cut its previous 2005 sales estimate by 23% to the range of $220 million to $240 million; since then shares have fallen 53% to a recent $28.51. The outfit denies wrongdoing. --David Serchuk

Misery Loves Company

A formal study seeking "The Best Places to Work" in the federal government put 35% of 218 agency subunits surveyed in a tie for last place. Among the laggards: the IRS, the Mint, the Federal Aviation Administration, the Export-Import Bank and the U.S. Holocaust Museum. Highest-rated component: Federal Mediation & Conciliation Services. Tops among the 30 parent agencies was the Office of Management & Budget; bottom, Small Business Administration. Researchers from two think tanks polled 150,000 federal workers in an effort to measure employee satisfaction. --Evan Hessel